In a note published today, analyst Jay Srivatsa now expects second-quarter revenue to be in line and third-quarter revenue guidance could be in line or shy of consensus. But Srivatsa believes Himax’s bearish thesis remains intact:

Expecting inline Q2:14 revenues but EPS may be shy on lower gross margins. While the company guided for non-GAAP EPS to $0.13 – $0.15, we expect a drop in HIMX’s gross margins stemming from price pressure in small panel ICs as the majority of the sales of smartphones in Q2:14 appears to be in the low end of the market. This could put non-GAAP EPS at lower end of guided range.

Expecting guidance to be inline or shy of consensus. The following data points suggest that HIMX could be conservative in guiding for Q3:14.
1. Novatek (3034.TW) guided for 9-12% sequential revenue growth for Q3:14.

4. AU Optronics (AUO) expects 5-8% growth in Q3:14 in small and medium panel shipments. and Innolux (3481.TW) is projecting a flat quarter following a strong Q2:14. We note that Innolux and AUO account for ~45% and ~10% of HIMX revenues respectively.

5. Samsung Electronics (SSNGY) following a dismal Q2:14 appears to have resumed order activity in Q3:14 leading to the October holidays in China. However, Xiomi seems to be gaining significant market share in China at Samsung’s expense. We note Xiomi primarily uses panels from AU Optronics with Novatek’s display drivers.

6. Large panel IC demand expected to be flat to down in Q3:14 due to capacity constraints and shift to larger screen sizes.

As such, we expect HIMX to guide to ~5% sequential growth in revenues from Q2:14 revenues putting it inline or just shy of consensus estimate of $209 million which represents 7% sequential growth from Q2:14 consensus. We also expect declining gross margin guidance that could put non-GAAP EPS of $0.08 – $0.10, inline with street consensus estimate of $0.10.

Add a Comment

We welcome thoughtful comments from readers. Please comply with our guidelines. Our blogs do not require the use of your real name.

Comment

There are 5 comments

AUGUST 6, 2014 10:44 A.M.

Mike J. wrote:

JAY - LONG TIME BEAR?? WHAT??? This guy was pumping Himax in February raising his price target. Just look at all the articles that Shuli Ren has published from Jay in the last 14 months. Jay was pumping this stock for months and now has taken a personal vendetta to try and SHORT AND DISTORT this stock. NOTHING has changed for this company from when Jay was saying BUY BUY BUY, EXCEPT - the following -

AUO Display reported an increase in SALES for 2Q14 - BEST Quarter in 4 YEARS!

Innolux reported an increase in SALES for 2Q14 - They are running at FULL CAPACITY

Huawei report and increase of 95% for 2Q14 YoY and is up 60% in Mobile Phone Sales THIS QUARTER!!

LG has reported STELLAR PROFITS for 2Q14 and set a RECORD Quarter with increased mobile sales

World Wide Mobile Phone SALES ARE UP YoY

World Wide Tablet SALES ARE UP 11% this Quarter

TV Sales are UP due to 4K and World Cup. Sony had a 30% increase in TV Sales due to World Cup for 1H14

PC Sales ARE UP!

Laptop PC are UP! Because of Windows XP being retired

Also, JAY doesn't ever talk about Himax's NEW WLO Technologies. Himax has released a 2x2 and 4x4 ARRAY CAMERA! Also, Himax sells a CMOS sensor and WLO single lens array camera to Huawei.

Samsung has also ramped up production of mobile phones to regain market share.

Himax had $25M in excess inventory that was built up for Samsung and they had moved $10M of it to other White Box customers well before the end of 2Q14.

If anyone is listening to the SO-CALLED analyst, be aware that he is the same guy that give YOD (You on Demand) a BUY rating and upped his price target from $6 to $10!! Really? A company that loses money every quarter that is trying to be the next NetFlix of China. Come one analyst! China restricts movies imported into the country to 34 a year. AND, NetFlix says, and I quote, "Doesn't even want to be the next Netflix of China." Let's look at the bigger picture. You have Chardan Capital that owned 200K shares of YOD and the owner Kerry Propper who has another 200K shares and then you have his cheerleader, Jay Srivatsa, yelling from the sidelines to BUY BUY, it's worth $10 a share.

Well Jay did the same thing last year when he was involved in Innolux offloading their shares and the market reacted and started selling off Himax. Jay and Shuli issued a reported on Barron's that Himax was oversold and it shot up 11% the next day. Talk about MARKET MANIPULATION. What a joke.

Himax is worth $8.50 to $9 a share and it has the fundamental analysis to back it up. Don't kid yourself with this nonsense coming from some loser analyst that manipulates stocks for the gain of his employer.

AUGUST 6, 2014 10:58 A.M.

TV Man wrote:

Hey Jay the Joke, Innolux is running at full capacity. So, it would stand that they would report flat growth. My mis-informed stooge, they just can't make anymore than what they have the capacity to build.

Guys like you are the problem with Wall Street. If you want to be taken seriously, get a real job.

It's comical that you are the only analyst that is constantly running his mouth with mis-information about Himax.

The last article was great "Himax COULD miss because of 3G sales in China". Hey genius, China is having a blowout year in smart phone sales and the sales numbers are posted right on the manufacturer websites. Just look on China Mobile. Yes new subscribers has slowed down, but conversions and sales of smartphones is definitely up substantially. Your prediction is so far from the truth it really makes you look bad.

Honestly, when people look at the last 16 months worth of coverage that you and Shuli have given Himax, it raises an eyebrow. Where was Shuli and Jay in 2009, 2010, 2011 giving their great insight as to why Himax should be a great stock to buy or sell.

Give it a rest and move on to your next target. Maybe a seed company or an SPAC from China. Go start fleecing peoples pocketbooks on another stock. You've lost all credibility when it comes to Himax.

AUGUST 6, 2014 5:06 P.M.

e-eagle wrote:

I think HIMXis worth whatever it was BEFORE any involvement/speculation ever happened regarding Google Glass. We're seeing a well valued company with decent growth prospects. Right now getting HIMX stock would be a good deal. Price potential: $8.50-$9.00 before December.

AUGUST 7, 2014 10:50 A.M.

The Truth wrote:

So Shuli, would you like to start doing some of your own research instead of just posting garage from Jay the Joke?

And, it looks like Jay was completely wrong about Himax and their 3Q14 Guidance and performance. Today's conference call and earning release just shows that Jay is a fraud and you are not a very good reporter.

AUGUST 11, 2014 6:51 P.M.

Shui Gone From Emerging Markets wrote:

The old report SHULI REN has been moved out of the Emerging Markets Blog. She should have been fired for terrible biased reporting. See comments below her latest article.

About Emerging Markets Daily

Emerging markets have been synonymous with growth, but the outlook for individual nations is constantly changing. Countries from Brazil and Russia to Turkey face challenges including infrastructure bottlenecks, credit issues and political shifts. Barrons.com’s Emerging Markets Daily blog analyzes news, data and research out of emerging markets beyond Asia to help readers navigate the investment landscape.

Barron’s veteran Dimitra DeFotis has been blogging about emerging market investing since traveling to India and Turkey. Based in New York, she previously wrote for Barron’s about U.S. equity investing, including cover stories and roundtables on energy themes. Dimitra was among the first digital journalists at the Chicago Tribune and started her career as a police reporter at the Daily Herald in the Chicago suburbs. Dimitra holds degrees from the University of Illinois and Columbia University, where she was a Knight-Bagehot Fellow in the business and journalism schools. She studies multiple languages and photography.